Can my 16-year-old set up different types of Isas in the same tax year?

He is now 16 and I believe he is allowed to set up a cash Isa, too. I would like to know if he is allowed to start a Help to Buy Isa because I’ve noticed Halifax is paying 4% on its Help to Buy Isa, a much better rate than ordinary cash Isas.

I realise there is a lower limit on the amount he could invest in a Help to Buy Isa than in a cash Isa."


"You are right that at 16 years old, your son can open an adult cash Isa as well as holding a Junior Isa and if he would prefer, he can start a Help to Buy Isa. As you also rightly point out, the amount that can be saved into a Help to Buy Isa is much less than the current annual adult Isa allowance of £15,240. When it’s set up, a lump sum of up to £1,000 can be added plus a maximum of £200 a calendar month.

If he has more than that, some providers offer what is known as a Portfolio Isa, which means that multiple Isas can be opened with the same provider without falling foul of the rules which state that you can only subscribe to one cash Isa per tax year.

Unfortunately, at the moment Halifax does not offer such a structure, so any additional funds would need to go into a standard savings account.

This may still be tax free if your son is a non-taxpayer. Even if he’s not, the introduction of the new Personal Savings Allowance in April 2016 means that for a basic-rate taxpayer, the first £1,000 of savings interest earned will be tax free anyway.

If you are giving your son the cash to save, you should be aware that there may be a tax liability to you on the interest earned on any money given to him, until he reaches the age of 18.This even applies to cash put into an adult cash Isa (but not a Junior Isa).

However, if the gross interest earned is less than £100 for each parent’s gift, it will be treated as the child’s under the ‘de minimis’ rules.

This means that, provided the interest earned does not make him a taxpayer, he will be able to offset this against his personal tax allowance, so it will often be free of tax. If the interest is more than £100 for each parent’s gift, then it will be treated as that parent’s interest for tax purposes and they will need to pay tax at their marginal rate. Gifts from other family members or friends will not be taxed."

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Anna Bowes is a founder and director at Savings Champion.